The Family businesses are evident in every industry and are a vital source of affluence and growth in our economy. The most sensitive and widely discussed family business dynamics revolves around ownership, governance, wealth management and succession plan. Balancing the equation of family informality and strong governance has been a struggle for most businesses. Creating an effective board of directors is key to ensuring business longevity and transparency. This is because they will exhibit profound expertise in both the industry and functional areas relevant to the company. In addition, the businesses should develop and formulate a family constitution, code of conduct, strategic plan and shareholder’s agreement to help them achieve their goals and ensure right structural balance. When it comes to the financial health and stability of the business, wealth management must be prioritised to build a cash reserve that can sustain the company for future generations. The key components for managing wealth include developing and implementing a wealth management strategy and fine-tuning it to accommodate change. These should be aligned with the family values and shared vision. One of the predominant feature in family businesses is the strong desire among family members to retain ownership and control of the business. Succession takes time and careful consideration to plan and ultimately implement it. Every business has its own unique succession plan, therefore, it ought to be tailored to specific elements of a business such as family values and expansion plans. Most business creators are always caught in the dilemma of selling the business or passing it on to the next generation. Depending on which option is taken, the family members need to be involved in the decision making for smooth transitioning. Generational differences have an impact Dynamics of a family business on succession plans. The ongoing tussle between honouring traditions is fading out as traditionalists and baby boomers try to maintain business values, while X-gens and Millennials seek to transform and revolutionize the business model .To ensure legacy of continuity and success, these businesses ought to embrace the cross generational engagement and collaboration. Selling a business to a third party happens when there is no clear successor within the family or the business is uncompetitive. This should be structured thoughtfully and done at the right time. The owner has to maximise the value of the business before selling since it is a one-time transaction and if not managed well, the family has a higher risk of losing wealth. In as much as family businesses want to be secretive in their business model and build a legacy, everything should be done professionally. Since businesses undergo various cycles from their formation to exit, they should seek help from professional business advisors to help them strategize, implement and monitor progress and performance.
Columned by Helima Kemboi